Natural gas rates could go down for northern Ontario customers in 2024

Enbridge Gas has applied for a rate change with the Ontario Energy Board that would see customers in northern Ontario pay less, starting in January 2024.

In the application, which the board has not yet approved, Enbridge said the average residential customer in the northeast would pay $193 less per year for natural gas to heat their homes. In the northwest the average customer would see their annual gas bill cut by $65.

Commercial customers in the northeast would see an average $5,947 decrease of their gas bill, while those in the northwest would have their annual bill reduced by $1,222.

But the same application would see higher rates in southern Ontario, where the average residential customer would pay $91 more per year, and the average business would see a $1,320 increase.

The Ontario Energy Board has already started public hearings to review the application. 

They're very careful to say that these are preliminary estimates.- Warren Mabee, director, Institute for Energy and Environmental Police, Queen's University

Warren Mabee, the director of the Institute for Energy and Environmental Policy at Queen's University, said northern Ontario customers can thank economies of scale if the application is approved, and their gas bills go down.

In 2019, Union Gas, which served natural gas customers across Ontario, and Enbridge Gas merged their operations.

Mabee said the combined infrastructure and assets from the merger makes it more economical to provide natural gas to northern Ontario customers.

"You can sort of imagine being part of a bigger distribution network than you were before," Mabee said.

"So suddenly the company can take advantage of that scale and they may be able to deliver services to customers in the north at a price point that's more cost effective."

Mabee said the company's new application is different from its quarterly price adjustments, which have resulted in higher rates due in part to the war in Ukraine and higher natural gas prices.

"This is what they call a rebasing," Mabee said of the new application.

The company looks at its existing assets and infrastructure to adjust its long-term rates. It's the first time Enbridge has made such an application since its merger with Union gas. 

Mabee said the proposed price adjustments for January 2024 also take into account possible changes to energy markets. But he added it's impossible to fully predict, that far in advance, what natural gas prices could do.

"Those commodity prices can be subject to short-term swings as we've seen over the last year that may exceed their forecast," he said.

"So they're very careful to say that these are preliminary estimates. They're based on where they think costs are going to be."